Find out what banks charge when you close a checking or savings account soon after you opened it. Learn why banks charge early account closure fees.
If you have to close a bank account, you’re probably wondering about the process and how to do it to in order to avoid fees. Some banks and bank accounts have “early account closure” fees attached to them if you don’t keep them open for a certain amount of time. If you are not sure what could happen when you close a checking or savings account before your bank terms stipulate it’s okay to do so, find out about the consequences of closing a bank account early.
There are plenty of legitimate reasons for having to close a bank account such as moving, avoiding monthly fees, or wanting to do business with another bank. You have the free will to move your money about as you please, but you should be aware of what could happen when you need to close a bank account early.
If you want to close a bank account, you should be aware of a potential early account closure fee. Banks have the right to charge you an “early account closure” fee if you close your account before you satisfy the requirement to keep your account open for 60, 90, 180 days or more.
| Bank | Early account closure fee | Terms |
|---|---|---|
| BB&T | $24 | Within 90 days of opening |
| Bank of America | $0 | N/A |
| M&T Bank | $50 | Within 180 days of opening |
| Wells Fargo | $0 | N/A |
| Regions Bank | $25 | Within 180 days of opening |
| Chase | $0 | N/A |
| KeyBank | $25 | Within 180 days of opening |
| Citibank | $0 | N/A |
| U.S. Bank | $25 | Within 180 days of opening |
| PNC Bank | $25 | Within 120 days of opening |
| Capital One | $0 | N/A |
| TD Bank | $0 | Account balance may have to be $0 before you can close |
| SunTrust | $25 | Within 180 days of opening |
| Fifth Third Bank | $0 | N/A |
| Santander | $25 | Within 90 days of opening |
Other financial considerations include any instances when your bank account is being used for payment. If your checking account is closed and you still have its information for paying a bill, for example, the biller could charge you with returned payment fees and/or late fees.
You might wonder, “Why are these bank fees necessary?” Though it seems like banks earn enough money as it is, from a business perspective, it can make sense for banks to charge this fee.
Think about the last time you opened up a new account with the bank. You probably had to sit down with a personal banker while they collected all of your personal information, gave you forms to complete, and took the time to explain all the rules terms and services while printing out paperwork to finalize the account setup. Then, it's likely that they took your deposit and personally walked it over to the teller window to deposit it. All in all, the entire process might have taken an hour or more. If the bank is especially busy, it could take even longer. Thinking about what it took to pay that personal banker, the teller to process the initial deposit transaction, and the paperwork, it's quite possible that banks may even be undercharging for early account closure fees. Now, we all know that banking is an extremely profitable business. So, in reality, the expenses banks incur for new clients are probably paid back multiple times when they acquire a new, long-term client. The problem comes when banking customers are not around long-term. To lessen the sting of losing money on these services, the early account closure fees make sense. They are in place to discourage consumers from leaving.
Also, you should know that new account cash bonuses are considered, by the IRS as earned interest. So those bank bonuses are taxable income.
With this in mind, you may actually find out that you're better off keeping your money in high yield savings accounts.
Plus, you avoid the potential to rack up service fees and early account closure fees.
What's more, is if you don't fulfill the amount of time you need to “park” your money in an account, your bonus could also be “clawed back.”
A clawback is when you must return a bonus or reward given to you for meeting bank requirements.
For all the hassle and changes you'll have to go through to keep thousands or maybe even tens of thousands of dollars tied up in your account for relatively small cash bonuses, you may find that you’re not using your time or money in the most effective manner.
However, if you do insist on this activity, you should know exactly what you're getting into along with the fees a bank will charge you for closing your account early.
